Any parent or legal guardian can open a savings account for a minor at virtually any bank or credit union, and in most cases a grandparent or other relative can too. The paperwork takes under an hour online or at a branch, and you’ll need identification for yourself and for the child. The harder question isn’t whether you can open one. It’s which account structure to pick, because custodial accounts and joint accounts carry very different rules about who owns the money, who can take it out, and what happens at tax time.
Who Can Open One
A biological or adoptive parent is the most straightforward choice, and a court-appointed legal guardian has the same standing. Many banks also let grandparents, aunts, uncles, and other relatives open certain account types for a child, particularly custodial accounts where the adult manages the funds on the child’s behalf.
The adult has to be at least eighteen. The child has to be under the age of majority, which is eighteen in most states, though a handful set it at nineteen or twenty-one. Banks will also check that the adult isn’t subject to legal restrictions that would prevent them from managing financial accounts.
Custodial Account or Joint Account
This is the decision that matters most, and it’s worth thinking through before you sit down with the bank.
Custodial (UGMA or UTMA)
A custodial account operates under either the Uniform Gifts to Minors Act or the Uniform Transfers to Minors Act. The adult is a custodian managing the money for the child; the child is the legal owner from the moment a dollar goes in. UGMA accounts hold cash and financial securities. UTMA accounts can also hold a broader range of assets like real estate.1Legal Information Institute (LII). Uniform Gifts to Minors Act (UGMA)
The detail that catches most people off guard: deposits are irrevocable gifts. Once the money is in, it belongs to the child. You can’t pull it back out for your own use, even if your finances change. The custodian can spend it, but only for the child’s benefit. When the child reaches the age of termination set by state law (typically eighteen to twenty-one, with some states allowing extension to twenty-five), the full balance passes to the child with no strings on how they use it.2Social Security Administration. POMS SI SEA01120.205 – The Legal Age of Majority for Uniform Transfer to Minors Act (UTMA)
Joint Savings
A joint account gives the adult and the minor shared ownership and shared access. The child can often get a debit card and make withdrawals on their own. Either account holder can transact or close the account. That makes it a useful tool for teaching money management, but it also means both parties have the keys, which can cut both ways with a teenager.
One practical difference matters: because joint funds aren’t legally the child’s alone, the adult can still reach them if the family’s finances get tight. That flexibility doesn’t exist with a custodial account.
What You’ll Need to Bring
Federal rules require banks to collect specific identifying information before opening any account. At minimum, the bank needs the following for both the adult and the child: full legal name, date of birth, residential address, and a taxpayer identification number, meaning a Social Security number or, for non-citizens, an Individual Taxpayer Identification Number.3eCFR. 31 CFR Part 1020 – Rules for Banks – Section: 1020.220 Customer Identification Program Requirements for Banks
The adult provides a government-issued photo ID, usually a driver’s license or passport. For the child, a Social Security card and birth certificate are the most commonly accepted documents, though requirements vary by institution. Online applications generally want scanned copies.
If neither the adult nor the child has a Social Security number, many banks accept an ITIN. Some will also work with a passport number and country of issuance, or an alien identification card number.4Consumer Financial Protection Bureau. Can I Get a Checking Account Without a Social Security Number or Drivers License Policies vary, so call ahead if your situation is unusual.
How the Application Goes
Most banks let you apply online through an encrypted portal, and you can also do it at a branch. The form asks for the identifying information above, plus the adult’s employment and income for risk assessment. You pick the account type and designate the child as beneficiary (custodial) or co-owner (joint).
After submission, the bank runs a verification check, often through ChexSystems or a similar reporting agency, to review the adult’s banking history for issues like unpaid overdrafts. The review typically takes a few business days. Most banks require a small opening deposit, and leaving a new account unfunded for too long can trigger automatic closure before it ever gets going.
Many savings accounts built specifically for minors charge no monthly maintenance fees, which is a meaningful advantage over standard adult accounts. Incidental fees like overdraft charges can still apply, so read the fee schedule.
Taxes on the Interest
Interest earned in a minor’s account is reported under the child’s Social Security number. The bank sends a Form 1099-INT each year if interest reaches $10 or more.5Internal Revenue Service. Topic No 403, Interest Received For most kids with modest balances, the tax owed is minimal. Once unearned income climbs, the kiddie tax comes into play.
For 2026, the first $1,350 of a child’s unearned income (interest, dividends, and capital gains) is tax-free. The next $1,350 is taxed at the child’s rate. Anything above $2,700 is taxed at the parent’s marginal rate, which is almost always higher.6Internal Revenue Service. Topic No 553, Tax on a Childs Investment and Other Unearned Income (Kiddie Tax) The rule applies to children under eighteen, and in some cases to full-time students under twenty-four. A plain savings account earning a few hundred dollars in interest won’t cross the threshold. A larger custodial account, especially one holding investments, can.
If the child’s only income is interest and dividends and the total is under $13,500, parents can elect to report it on their own return using Form 8814 rather than filing a return for the child.6Internal Revenue Service. Topic No 553, Tax on a Childs Investment and Other Unearned Income (Kiddie Tax) It saves paperwork, but the first $1,350 that would otherwise be tax-free gets taxed at 10% under the election, so running the numbers both ways can be worth it.
Gift Tax When You Fund a Custodial Account
Deposits into a custodial account count as gifts for federal tax purposes. For 2026, you can give up to $19,000 per recipient per year without triggering any gift tax reporting.7Internal Revenue Service. Whats New – Estate and Gift Tax A married couple can each give $19,000, for a combined $38,000 per child per year. Larger deposits require filing a gift tax return, though no actual tax is owed until you exceed the lifetime exemption, which for most families will never happen.
Custodial accounts have no statutory contribution limit. But every dollar is an irrevocable gift, so overshooting your plans is not something you can undo.
Impact on College Financial Aid
Custodial accounts can take a real bite out of financial aid eligibility, and this surprises a lot of families. Under the federal formula, assets owned by a student are assessed at 20%, which means every $10,000 in a UGMA or UTMA account raises the expected family contribution by $2,000. Parent-owned assets are assessed at roughly 5.6%.
A 529 college savings plan is treated far more favorably: parent-owned, it counts as a parental asset at the 5.6% rate, and qualified withdrawals don’t count as income for aid purposes. If college aid matters to your family, that difference alone may push you toward a 529 instead of, or in addition to, a custodial savings account.
If the Adult Dies
What happens depends on the account type, and getting it wrong can leave a child’s money tied up in court.
Most joint bank accounts include a right of survivorship. If one co-owner dies, the other becomes sole owner automatically, and the minor would typically take outright ownership without going through probate.
On a custodial account, the custodian can name a successor in a will or a signed designation. If the custodian dies without naming one, a minor who is at least fourteen can usually designate the successor themselves, choosing an adult family member, their guardian, or a trust company. If the child is younger than fourteen or doesn’t act within sixty days, the child’s legal guardian typically steps into the custodian role. If no guardian exists or the guardian declines, a court appoints one. If you’re a custodian, name a successor in writing. It’s a two-minute step that keeps the funds moving to the child instead of sitting in a legal process.
Keeping the Account Active
A savings account opened for a five-year-old and then forgotten doesn’t sit untouched forever. After three to five years with no customer-initiated activity (the exact window depends on state law), the bank must treat the account as abandoned and turn the money over to the state through a process called escheatment.8Office of the Comptroller of the Currency. When Is a Deposit Account Considered Abandoned or Unclaimed The money isn’t lost. States hold unclaimed property and let rightful owners file a claim. But the process is slow. A small deposit every year or two keeps the account active and avoids it entirely.
FDIC Insurance
Custodial accounts get their own FDIC coverage, separate from the custodian’s personal accounts. The FDIC treats a custodial account as a single account owned by the minor, so the child gets up to $250,000 in deposit insurance at each bank, regardless of how much coverage the adult has already used on their own accounts. Joint accounts fall under the standard joint account insurance rules.
Alternatives Worth Comparing Before You Commit
A plain custodial savings account isn’t your only option, and depending on your goal, something else may suit you better.
If the money is for education, a 529 plan offers tax-free growth and tax-free withdrawals for qualified education expenses. The parent keeps control of the account, unlike a custodial account where the child takes over at the age of termination, and the financial aid treatment is far more favorable. The tradeoff: money spent on anything other than education gets taxed and hit with a 10% penalty on the earnings portion.
Coverdell ESAs also grow tax-free for education expenses and cover a wider range of costs than 529 plans, including K-12. The contribution limit is $2,000 per beneficiary per year, with income phase-outs that reduce or eliminate eligibility for higher earners.9Internal Revenue Service. Topic No 310, Coverdell Education Savings Accounts The low cap makes a Coverdell most useful as a supplement rather than a main vehicle.
For families who want flexibility and no restrictions on how the child eventually uses the money, a custodial savings account is the simplest answer. For families focused on college costs and financial aid, a 529 usually wins. Plenty of families end up with both.